Suppose you are looking to cut costs in your business. In that case, you may consider doing your own accounting if you have a solid understanding of business finances and have an accounting background.

If you do not have the experience to manage your business books and think that you can learn as you go, then you need to stop and think again.

When you manage your own accounting systems and do this incorrectly, then you can hurt your business.

Here is how an accountant can help your small business.

In the Start-Up Process

When you start your business, you will need to set up several systems and go through certain actions to have a solid foundation.

An accountant can help your business in the following ways:

  • Define the best business structure for you
  • Help with the financial analysis in your business plan
  • Advice on the accounting software that you might need
  • Advice and help with opening a business bank account.
  • Ensure that your accounting procedures are in line with government requirements and regulations.
  • Advice on how to track expenses during daily business activities.
  • Explain why it is important to make sure that personal and business expenses are separate.

Regular Business Operations

Once your business is up and running, you will need to maintain the accounting system. Again, your accountant can help with:

  • Ensure the IRS classifies your independent contractors as that.
  • Explain your financial statements, so you know your business better
  • Oversee the payment processes
  • Advice on tax payments
  • Explain when and to who you will need to send your W2 and 1099 forms
  • Close your books and create financial reports at the end of the year
  • Prepare and submit your financial reports, taxes and other paperwork to the IRS.

Business Growth Stage

When you are ready to grow your business, then your accountant can be a fundamental resource. Here is how your accountant can help.

  • Determine growth areas by providing valuable insight into inventory management, cash flow patterns, business financing and pricing.
  • Advice on leasing and buying property and equipment
  • Help in preventing auditing by the IRS
  • Prepare and help you through an audit
  • Create financial forecasts
  • Create a business budget
  • Advice and assistance in the sale of your business.

As you can see, an accountant can be a fundamental resource to small business owners.

Accountants do forensic accounting work in anticipation of litigation, including fraud, bankruptcy, valuation, and other professional accounting services. They possess special skills in specific industries such as tax, insurance, banking, mortgage, employment and learn the business practices related to those fields. Forensic accountants are actively looking for signs of fraud and must look beyond the numbers and anticipate criminal actions.

Forensic accountants conduct interviews to obtain individual stories. Forensic accountants must possess exceptional observational skills to pick up hints or suspicious clues. After collecting evidence, a forensic accountant begins the analysis. Then the forensic accountant writes a report explaining his or her opinions and conclusions.

Forensic accountants also provide litigation support. Attorneys engage forensic accountants to review evidence and testimony and explain its significance. A forensic accountant can tell the attorney what additional information is needed to prove the case and what questions to ask a witness. This is the primary qualification that makes Forensic Accountants different from Fraud Examiners.

Certified Fraud Examiner

On the other hand, fraud examinations can be conducted by either accountants or non-accountants and refer only to anti-fraud matters. A Certified Fraud Examiner (CFE) is a specialist who is educated and trained in detecting and deterrence a wide variety of white-collar crimes such as identify theft, fraud, and embezzlement. CFEs gather evidence, take statements, write reports and help in investigating fraud in its varied forms.

CFEs are employed by many large corporations and government agencies and investigative services; others provide consulting. However, they cannot provide expert testimony in a criminal case as Forensic Accountants can. Certified Fraud Examiners (CFE) come from various professions, including forensic accountants, auditors, CPAs, fraud investigators, educators, loss prevention specialists, attorneys, and criminologists.

What is a CPA, and what do Accountants do?

This discussion can go in one of several tangents, but I will try to keep things as simple as possible and tell you how I would answer these questions.

A CPA, or a Certified Public Accountant, is a certification and license granted by the State Board of Accountancy in each of the United States to individuals who have demonstrated the competency and ability to excel in the accounting field of study and profession.

There are several CPA requirements that one must meet to become a CPA. The most difficult of these is to pass the uniform CPA exam. However, once licensed, a CPA can practice in several career fields that he or she would not have been able to without the certification.

Possessing a CPA license comes with certain perceptions, prestige, credibility, respect and a higher salary. It also gives you the best chance to advance in your professional career relative to your peers.

A CPA is beneficial for several other reasons. CPAs generally earn 10-20% more than their peers. The accounting industry is evergreen, and the job security of a CPA is stronger than their peers. In addition, the profession is only expanding and growing with time, thus the need and demand for qualified CPAs.

There are several other reasons why many want to become a CPA. You can read about how to become a CPA here.

What Do Accountants Do?

Accountants have always had and will continue to have a vast role in the overall economy. Accountants are involved in several specialties such as audit, tax, mergers and acquisitions, forensic accounting and even regulatory compliance.

You can read more about the various CPA career routes here.

With the increasing size and complexity of global organizations, laws and regulations, the need for qualified CPAs is more than ever and will only likely increase over time.

I hope this brief explanation of what a CPA is and what do accountants do was helpful to give you a general idea.